Monday, April 18, 2011

INFLATION AND CONGRESS IS 'TAKEN IN' BY. CORN TO PRODUCE ETHANOL!

One trip to the grocery store is enough to remind me that the recent uptick in the stock market has no bearing on the cost of living these days. And yet, Federal Reserve Chairman, Ben Bernanke could suggest with a straight face to Congress that we are experiencing a “temporary and relatively modest increase in U.S. consumer-price inflation.” I suppose compared to an annual salary of close to $200,000, the price of a cucumber wouldn’t matter much to an out of touch Washington bureaucrat.

Over the last six months, crude oil, corn and cotton rose a visibly immodest 35 percent, 38 percent and 89 percent, respectively. A recent Bureau of Labor Statistics report confirms what our flattened wallets already told us: food and energy prices are on the rise. According to the report, food prices in March made the biggest gain since 1974 - with a 3.9 percent increase. In February, energy prices rose 3.3 percent and gasoline, 3.7 percent.

Bernanke’s “relatively modest” comment conjures up images of the “two Americas” Senator John Edwards once described. On one side, you have the Washington bureaucrats, and on the other side are those you see roaming the grocery aisles with clipped coupons in their hands and corn flakes sticker-shock in their eyes.

To be fair, Bernanke is technically correct to say that we do not have an inflation problem – because, due to their pricing volatility, the Federal Reserve does not include food and gasoline prices purchased by consumers in its calculation. But Americans aren’t much interested in federal government technicalities these days. They are instead focused on the newfound art of stretching those “non-inflated” dollars to provide for their families.